The perpetually valuable MSP: There's more to MSP success than growth

20 November, 2014

Dave Sobel

At our MAX 2014 conferences, we introduced a concept around an MSP model designed to not only encourage growth, but to ensure the long-term viability of a business. Through a dedicated research study, we interviewed and examined some of the most successful MSPs looking to understand where their success truly came from. These MSPs not only embraced the core tenants of the managed services model, but also understood how to modify their behaviors to adapt for the future.

Managed Services as a business model is designed to put both the solution provider and the customer in alignment, or “on the same side of the table”. Among several benefits, the model provides revenue consistency for the MSP and budget consistency for the customer. It provides access to advanced tools for the customer, and the benefits of scale for the MSP to use advanced tools. These are among the reasons solution providers become MSPs.

What makes an MSP successful?

In our research, we highlight three core characteristics to the most successful MSPs:

MSPs at the top of their game have insights into market conditions and technology progress, developing new products and offerings in a way that benefits both customer and MSP.

They have a focus on Operational Process Discipline. These MSPs are built on a foundation of repeatable process, and the commitment to address and resolve big or small issues via process management. Exceptional MSPs excel at this.

Those best-in-class MSPs have a deep understanding of customer requirements, beyond pure technical skills, and focus on business outcomes as part of their delivery process.

However, the idea of becoming The Perpetually Valuable MSP is more than just the idea of growth. While important, many focus on the idea of growth alone as the key to success but there are other components to consider. Imagine owning a buggy manufacturing company right before the advent of the car. Transportation needs continued to grow, of course, but not always with the same business model, and those who built buggies to be drawn by horses could have continued to focus on growth alone and stay in business. Doing so would have created short term gain but not long term success. Growth is useful but alone it is not a long term business model.

Looking to the future

While not experiencing as seismic a potential shift, technology businesses focused on managed services should always be experimenting with their next offerings. Installing and managing Exchange servers as the only solution set in an MSP’s offerings would be an unwise choice in an ever changing world of cloud technologies, and the addition of a new service offering, such as Office 365 or Google Apps installation and ongoing management is a wise, forward thinking move. This encourages not only growth, but viability in the long term. Cloud technologies are offering new service delivery models, but not proving to be the exclusive model of technology.

The Perpetually Valuable MSP is one that understands the balance between the stability and consistency of current offerings with the experimentation of new offerings introduced into the service and product set. These new offerings are developed in a systematic way, tested and refined, and then integrated into the main offerings. Additionally, older offerings that are no longer viable are decommissioned in a similarly systematic way, ensuring that older technologies and systems are not left beyond their business limits. These ideas are among ten of the best practices we highlight in our research, and will continue to discuss in the MAX-IQ blog.

Growth is important to viability for a business, but is not the best way to accomplish success. New product and service development is part of the growth equation, not only encouraging revenue growth, but also establishing a business as perpetually valuable to its customers.